December 2015 – What’s app in Europe?

What’s going on in Brussels? This section aims to provide the reader with an overview of some of the most significant issues being addressed by the EU institutions and the main topics that have been discussed in the last month.

On 9 December 2015, the Commission published two proposals aimed at promoting access to digital content and online sales across the EU. This initiative is part of its Digital Single Market Strategy. The first proposal deals with the supply of digital content (like streaming music), while the second concerns the online sale of goods.

These initiative aim to reduce the main obstacles to cross-border e-commerce in the EU, namely the fragmentation of the law in the area of consumer contract and low consumer trust when buying online from another country. Consumers will benefit from the proposals by means of the reversal of the burden of proof and more clear rights from digital content. Business will benefit thanks to more legal certainty and a business-friendly environment, and cost savings.

The Digital Market Strategy is expected to be turned into concrete legislative acts in the next six months.

On 8 December 2015, the EU formed an alliance with 79 African, Caribbean and Pacific countries in a final effort towards agreement at the climate Summit COP21. This coalition reached an agreement on some of the most divisive aspects of the proposed deals, i.e. the legally binding nature that Paris agreement shall possess, its need of being reviewed every 5 years as well as including a transparency and accountability system to track nations’ progress on their climate pledges.

The EU would pay 475 million euros to support climate action in the partner countries up to 2020 in African, Caribbean and Pacific countries.

We report on this coalition between the 28 EU Member States and the 79 ACP States as it is clear that it formed the basis of the agreement with all States allowing for a successful conclusion of COP21. If this sort of coalition can be repeated in other sectors these two groupings can have a strong influence on the way the world is governed.

State financing for Poste Italiane’s universal service obligation approved

On 4 December 2015, the Commission approved the compensation aimed to satisfy its so-called ‘universal service obligation’, which was granted by Italy to Poste Italiane for the periods 2012-2015 and 2016-2019.

Some months previously Italy had notified the Commission, in accordance with EU state aids rules on public service compensation, of its intention to offset Poste Italiane for its universal postal service obligation, providing basic postal services throughout the whole country and subject to low prices and a few quality requirements. Poste Italiane would receive a maximum of €1.05 billion for the years 2016-2019 (€262 million per year).

Formal investigation into Luxembourg’s tax treatment of McDonald’s

On 3 December 2015, the Commission opened a formal State aid investigation into suspected tax arrangements enjoyed by McDonald´s in Luxembourg. The Commission is concerned that those arrangements are unlawful State aids. This initiative recalls the formal investigations launched i) against the Netherlands, which had given Starbucks a tax deal, ii) against Luxembourg in relation to the Chrysler-Fiat issue and Amazon, iii) against Ireland in relation to Apple, and iv) into Belgium’s ‘excess profit’ ruling system.

The Commission will now investigate whether McDonald’s Europe Franchising was granted a favourable tax treatment in breach of EU state aid rules. Indeed, the Commission suspects that Luxembourg misused the provisions on double taxation in order to grant McDonald´s an advantage not available for any other competitor in the market.

EU finalises proposal for investment protection and Court System for TTIP

On 12 November 2015, the Commission formally presented to the US its proposal for a reformed approach on investment protection and a new and more transparent system for resolving disputes between investors and states, the Investment Court System.

The proposal seeks to safeguard the right to regulate and create a court-like system with an appeal mechanism based on clearly defined rules. The key elements are that i) judges would be qualified and ii) the transparency of proceedings should be assured. Additional improvements on access to the new system by SMEs were also proposed.

The EU will now resume negotiations with the US on the subject of investment protection and resolution of investment disputes, which has been at an impasse until now. In the meanwhile, the Commission will start working on setting up a permanent International Investment Court. This project would lead to the full replacement of the ‘old ISDS’ mechanism with a modern, more efficient, more transparent and impartial system for international investment dispute resolution.

On 12 November 2015, the Commission approved 33 new programmes aiming to promote EU agricultural products within the EU (20 with the scope of internal market) and in third country markets (with 13 programmes set aside for that).

These programmes will apply to products which have been harmed the most because of market difficulties, namely dairy products, meat, fruit and vegetables, olive oil, organic as well as quality products covered by geographical indications.

The plan – worth €108 million, half of which emanates from the EU budget – will lead to the opening of new markets and a significant improvement in the consumption trends of the products within the EU and beyond its borders.

The General Court confirms that the aids granted by Spain to the operators of the terrestrial television platform are illegal

On 26 November 2015, the General Court found that public funding grants – worth EUR260 million – granted by Spain to Digital Terrestrial Television (`DTT´) operators during the period 2005-2009 were illegal.

Between 2005 and 2009 the Spanish authorities adopted a series of measures aimed at facilitating the transition from analogue to digital television. By decision in June 2013, the Commission declared that the aid accorded to the operators of the terrestrial television platform for the deployment, maintenance and operation of the digital terrestrial television network in Area II to be unlawful and incompatible with the internal market. Spain and some Autonomous Communities in that country brought an action for annulment against that decision.

The November 2015 ruling of the General Court dismissed all the actions and confirmed the Commission’s decision. The General Court considered that, first, the Commission did not err in concluding that, in the absence of a clear definition of the operation of a terrestrial network as a public service, the measures at issue should be regarded as State aid. Second, the Commission correctly considered that the measures at issue could not be considered as State aid compatible with the internal market, in particular since they did not respect the principle of technological neutrality.

Spain must now decide whether to recover the unlawful aids from the recipients or to launch an appeal before the Court of Justice against the decision of the General Court.